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Tuesday, April 6, 2010

US, India must push for balanced growth

US Treasury Secretary Timothy Geithner said on Tuesday that the United States and India must work together on rebalancing global growth and revamping a battered financial system.

After opening bilateral economic partnership talks here, Geithner said in a prepared statement that the United States and India "need to work more closely together".

"Our ability to cooperate on economic and financial issues will be critically important to the success of global efforts to create conditions for a more stable global financial system, more balanced global economic growth that is less dependent on the willingness of Americans to live beyond our means, more effective and representative international financial institutions, and a more open global trading system."

Geithner lauded India's handling of its economy through the financial crisis, saying it was emerging stronger and faster than most large economies, adding that prospects for both the United States and Indian economies were "encouraging" in the face of global recovery.

"While (US) unemployment remains unacceptably high, the private sector has added jobs during four of the past five months, private investment is increasing, productivity growth is very high, the financial system is recovering, private savings have improved, and our economy is now borrowing significantly less from the rest of the world," Geithner said.

The US Treasury chief's prepared statement only broadly outlined the discussions, saying his counterpart, Indian Finance Minister Pranab Mukherjee, outlined challenges ahead for India's economy and policy reforms the country is taking to raise the rate of overall growth.

"India has a dynamic entrepreneurial private sector, a demonstrated ability to compete in the global market, and a commitment to quality higher education," Geithner said. "With those strengths and the minister's proposed reforms, India's economic growth, already impressive, will be even stronger in the future."

Geithner's statement made no mention of US efforts to persuade China to lift the value of the yuan after he made a decision over the weekend to delay an April 15 Treasury report that could have branded China a currency manipulator. He has pledged to work through the Group of 20 and other multilateral groups to achieve more flexible currency policies that can smooth out trade flows and reduce imbalances.

Geithner said the United States and India have some common problems, such as designing a private financial system that can finance future innovations and infrastructure needs, as well as extending financial services to more people who are outside the traditional banking system.

The Treasury chief also gave a nod to India's demands for more representation for developing economies in the World Bank and International Monetary Fund, saying they needed to be more effective and representative. The representation issue is expected to be considered later this month at the institutions' spring meetings in Washington.

The economic partnership talks are focused on three main areas: economic stability, infrastructure finance, and financial sector reforms and cooperation.

They aim to bring more prominence to the bilateral US-India relationship, which has taken a back seat in recent years as US-China ties have deepened. Geithner on Wednesday will travel to Mumbai to meet with Indian entrepreneurs and corporate chief executives.

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